Richard Florida
by Richard Florida
Thu Jun 5th 2008 at 12:51pm UTC

The World Is Getting Spikier

Ryan Avent, drawing on the research of Ed Glaeser and his collaborators, suggests that higher energy and transportation costs may spur a great “unflattening.”

In recent decades, global trade patterns–that is the structure of
supply chains and mix of products shipped–have developed in a world of
more or less persistent declines in transportation costs (and, one
presumes, the expectation that those declines would continue). In the
same way, our domestic urban geography has evolved with certain
expectations about transportation cost trends in mind.

Some non-trivial portion of those transportation cost declines,
actual and expected, are likely not sustainable over the long-term.
Depending on just how off expectations were, we could see some
interesting changes in economic patterns. For one, I’d expect a global
squishing of supply chains and cities. For another, I’d expect the mix
of shipped goods to move toward high value items, which have a lower
ratio of shipping costs to sale price. That may mean a return of some
production jobs to service-oriented economies.

He’s got a very good point.

One Response to “The World Is Getting Spikier”

  1. Michael R. Bernstein Says:

    “That may mean a return of some production jobs to service-oriented economies.”

    Hmm. It may, but probably relatively few.

    Instead, I would assume that the return of production to service-oriented economies will be attended mostly by new service jobs, not production jobs. Think ‘assembly-line robot technician’ and ‘desktop CNC repairman’. Don’t expect the new production sector to look like the old one. We may also get more general-purpose (and reconfigurable) manufacturing facilities for lease (think semiconductor fabs, but for a wide range of retail products, from furniture to kitchen appliances), enabling just-in-place manufacturing.

    On the other hand there may be a boom in dis-assembly-line jobs as regions try to close the materials loop, since this is less amenable to automation.